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Nissan to pull Infiniti production out of Japan to counter strong yen

Nissan has launched production of the Infiniti JX at its plant in Tennessee.

The high value of the yen will prompt Nissan Motor Co. to shift production of Infiniti vehicles out of Japan to other locations, Nissan CEO Carlos Ghosn said.

"You won't have to wait a long time before we make a decision about the new base for sourcing of Infiniti," Ghosn told a group of reporters April 4 during the New York auto show. "If you follow our logic, we should make the cars where we sell them."

Infiniti currently imports every model but one from Japan. Last month, the luxury brand launched production of the new JX35 crossover at Nissan's assembly plant in Tennessee.

Ghosn said that North America and China are both under consideration as locations for additional Infiniti production sites.

Coincidentally, Nissan said earlier this year that it will build a new $2 billion assembly plant in Aguascalientes, Mexico, and has not specified what products it will produce there.

On Wednesday, one dollar bought 82.36 yen in trading, though the Japanese currency has bounced off its recent highs.

The yen's strength has substantially weakened Japanese automakers' earnings on exports, forcing them to move more output overseas.

Ghosn blamed the high value of the yen for holding Infiniti back from his goal of claiming 10 percent of global luxury sales.

He admitted Infiniti is still far behind on that goal.

"Infiniti is not sold in Japan," he noted. "So this is an interesting case where you have most of the sourcing in Japan, none of the sales in Japan. And today, having the sourcing in Japan with the yen is obviously not the right system. So we're going to be moving Infiniti out of Japan in order to give it a little bit more competitiveness."

Last year, Infiniti sales in China rose 61 percent, according to the company. The automaker recently announced that it will move Infiniti's global operating headquarters out of Japan and establish it in Hong Kong.

Ghosn said that Nissan has observed Infiniti's German rivals diversify their source of production at different locations around the globe. He indicated that diversification is also a smart move for Infiniti.

"We're seeing what the Germans are doing," he said. "The Germans are diversifying their base and they are producing practically everywhere."

Infiniti's U.S. sales are down 6 percent so far this year from the same period in 2011, despite the addition of small numbers of new JX sales.